First Amendment To Management And Operations Agreement

Exhibit 10.67

FIRST AMENDMENT

to

MANAGEMENT AND OPERATIONS AGREEMENT

AMENDED AND RESTATED As of January 1, 2005

This First Amendment (this " First Amendment" ) to the Management and Operations Agreement Amended and Restated as of January 1, 2005 (the " 2005 Management Agreement" ), is made as of April 1, 2007, by and among State Automobile Mutual Insurance Company (" State Auto Mutual" ), State Auto Financial Corporation (" STFC" ), State Auto Property and Casualty Insurance Company (" State Auto P&C" ), State Auto National Insurance Company (" National" ), Milbank Insurance Company (" Milbank" ), State Auto Insurance Company of Ohio (" SA OH" ), Meridian Security Insurance Company (" Meridian Security" ), Meridian Citizens Mutual Insurance Company (" Meridian Citizens Mutual" ), Meridian Insurance Group, Inc. (" MIGI" ), Farmers Casualty Insurance Company (" Farmers Casualty" ), Stateco Financial Services, Inc. (" Stateco" ), Strategic Insurance Software, Inc. (" S.I.S." ), 518 Property Management and Leasing, LLC (" 518 PML" ), State Auto Florida Insurance Company (" SA FL" ), Beacon National Insurance Company (" Beacon" ), Beacon Lloyds, Inc. (" BLI" ) and Beacon Lloyds Insurance Company (" Beacon Lloyds" ), First Preferred Insurance Company (" First Preferred" ), and Petrolia Insurance Company (" Petrolia" ) (Beacon, BLI, Beacon Lloyds, First Preferred, and Petrolia are collectively referred to herein as the " Beacon Insurers" ). This First Amendment shall be effective and operative as set forth in Sections 11 and 12 of this First Amendment.

Background Information

The 2005 Management Agreement describes the operating relationship among substantially all of the affiliates of State Auto Mutual and State Auto Mutual, the ultimate controlling person in the State Auto Mutual insurance holding company system.

SA FL is a wholly owned subsidiary of State Auto Mutual and has re-domesticated to the State of Indiana from the State of Florida.

Eagle Development Corporation (" Eagle" ) and the Beacon Insurers became indirect subsidiaries of State Auto Mutual pursuant to a merger (the " Merger" ) of a subsidiary of MIGI, a wholly owned subsidiary of State Auto Mutual, with and into Eagle, with Eagle being the surviving corporation of the Merger and a wholly owned subsidiary of MIGI. The Merger was effective on March 28, 2007. The Beacon Insurers became affiliates of State Auto P&C by virtue of the Merger.

For purposes of the 2005 Management Agreement and this First Amendment, the " Mutual Group" or the " State Auto Mutual Group" shall mean State Auto Mutual, Meridian Security, Meridian Citizens Mutual, MIGI, SA FL and the Beacon Insurers, and the " State Auto Financial Group" shall mean STFC, State Auto P&C, National, Milbank, SA OH, Farmers Casualty, Stateco, S.I.S. and 518 PML.


1

With this First Amendment, the parties to this First Amendment intend to (i) add SA FL as a party to the 2005 Management Agreement, and (ii) add the Beacon Insurers as parties to the 2005 Management Agreement, provided that the arrangements between the Beacon Insurers, State Auto P&C and State Auto Mutual recognize that Beacon has its own employee force performing services for it and the other Beacon Insurers.

In response to a recommendation from the Independent Committee of the Board of Directors of each of State Auto Mutual and STFC, the Boards of Directors of the State Auto Financial Group and the State Auto Mutual Group have approved this First Amendment.

Statement of Agreement

In consideration of the mutual covenants set forth herein and INTENDING TO BE LEGALLY BOUND HEREBY, the parties to this Amendment agree to amend the 2005 Management Agreement as follows:


1.

Capitalized terms used in this First Amendment (including the Background Information) which are not otherwise defined herein shall have the meanings ascribed to such terms in the 2005 Management Agreement.


2.

Upon the SA FL Effective Date, the existing Cost Sharing Agreement between SA FL, State Auto Mutual and State Auto P & C shall automatically terminate with no further force or effect, and SA FL shall automatically become a Managed Company with all rights and duties thereof as set forth in the 2005 Management Agreement.

3.

Upon the Beacon Insurers Effective Date, each Beacon Insurer shall automatically become a Managed Company with all rights and duties thereof as set forth in the 2005 Management Agreement, except as otherwise specifically set forth in this First Amendment. It is understood and agreed that Beacon has its own employees who provide managerial, supervisory, ...